More steps in offing to empower banks to recover bad loans: FM

New Delhi: Amid mounting NPAs of public sector banks, Finance Minister Arun Jaitley today said the government is considering more steps to empower banks to recover bad loans and the problem will be contained soon.

"The bankruptcy law is under active consideration. The government is also considering some further steps to empower banks to be in a position to recover these monies (non- performing assets). I think it's a problem which will soon come under control," he told reporters at the North Block.

Union Minister Arun Jaitley. PTI

Observing that there is a problem of NPAs, he said "these are the loans, which have earlier in point of time given by these banks and as a part of prudent policy it has been considered the balance sheets should be transparent. The banks are going to take all steps possible to recover the loans from debtors."

He said Reserve Bank through various policies have empowered banks to recover NPAs.

As on September, the gross NPAs of PSBs have increased to Rs 3.01 lakh crore as against Rs 2.67 lakh crore in March.

Pointing to some over reactions to reports in the section of media with regard to the state of the public sector banks, the Finance Minister said, "in any case the volume and extent of the problem should not be exaggerated so as to lead to any panic."

Yesterday, Reserve Bank Governor Raghuram Rajan also assured that there won't be a repeat of the asset quality review (AQR) that has shaved off banks' bottom-lines and the resultant battering of banking stocks and the massive erosion of investor wealth.

"We do not envisage a sequence of AQRs," Rajan had said. Using a medical jargon to impress the need for such a review, Rajan said a "deep surgery" is needed to clean up and the process of recognising the NPA is akin to an "anesthetic" needed for the procedure.

With regard to capital needs of state-owned banks, Jaitley said "the government is fully committed to support public sector banks by providing whatever capital requirements are there because these banks have played very important role in supporting the Indian economy and their support is also required for supporting further growth."

Terming non-performing assets as a problem, Jaitley said the government is considering more steps to empower banks to recover bad loans and the problem will be contained soon.

"These are the loans which were given earlier by these banks and as a part of prudent policy it has been considered that the balance sheets should be transparent. The banks are going to take all steps possible to recover the loans from debtors," he said.

The Finance Minister added that the Reserve Bank, though various policies, has empowered banks to recover NPAs.

By September 2015, the gross NPAs of PSBs had increased to Rs 3,00,743 crore as against Rs 2.67 lakh crore in March 2015.

Pointing to some over-reactions to reports in the section of media with regard to the state of the public sector banks, Jaitley said, "In any case the volume and extent of the problem should not be exaggerated so as to lead to any panic."

Regarding fund requirements of banks, he said the government will provide whatever capital they need because these banks have a very important role to play in supporting the Indian economy and their support is also required for supporting further growth.

Last year, government announced a revamp plan for PSBs -- Indradhanush -- to infuse Rs 70,000 crore in state-owned banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirements in line with global risk norms Basel III.PTI